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UNIT VII. FRANCHISING

Topics for discussion.

1.What is franchising?

2.Franchisee and franchisor.

Ex. 1. Read the text and explain the meaning of the words in bold.

Franchising is a business system in which a company (or franchisor) sells an individual (or franchisee) the right to operate a business using the franchisor’s established system or format.

As part of the franchise agreement the franchisee pays an initial sum of money, a franchise fee or front end fee, to the franchisor and agrees to pay a royalty or management service fee for continuing advice and assistance, which is usually calculated as percentage of annual turnover. The franchisee may also pay an advertising fee to contribute to the franchisor’s annual advertising and marketing cost.

The franchisee also has the necessary capital to open the business.

The franchisor provides an operations manual which contains all the information that the franchisee needs to run his or her business. A franchisor may appoint a master franchisee to supervise the business in a particular area.

Ex. 2. Match the word with the Russian equivalent.

Ex.3. In pairs, think of as many examples as you can of franchise operations in your country in the following sectors.

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Ex. 4. In pairs, decide if the points below refer to (a) franchisees or (b)

B. Read a business adviser’s talk about franchising and check your answers.

Well, I think if we first look at things from the franchisee’s point of view, imagine you are interested in going into business yourself. You have an idea, OK, but how can you be sure that it will work? Well, in fact you can’t. You just have to live with the risk that you, just like 50% of all new businesses, will fail. Now with franchising that’s not the case because you’re investing in a business that’s already operating in other places. It’s a save bet. So that’s the main advantage for the franchisee – reduced risk. But, of course, he or she has to accept certain conditions as part of the deal. For instance, there are rules that must be followed. This could concern, perhaps where the franchisee buys his or her products from, what he or she can sell in his shop, the way the employees should dress and behave, the type of information that must be provided, such as regular reports on sales. However, in exchange it is true that the franchisee does have quick access if he or she needs advice about something.

From the franchisor’ position it’s really a very different view. The franchisor, the inventor of whatever the product or service is, wants to expand the business to cover as much territory as he can. Now the real advantage here is that he can do that without having to invest his own capital and without having to recruit and manage personnel. All that is taken care of by the franchisee. From then on, he or she can simply watch the increased fees coming in as his company expands. In addition to that, the franchisor can also keep tight control over the way that individual franchisees actually manage their business and take actions if things go wrong. Similarly if a franchisee wants to sell the business then they would have to get the approval of the franchisor. Normally the franchisor will also look after the business at national and international level which, of course, means promoting the business through national advertising.

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Ex.5. Work in groups. Group A makes a list of what you think are the principle advantages and disadvantages of the franchise system for a franchisee. Group B does the same for a franchisor. Compare your lists.

Ex. 6. Now you will study the information about Dunkin’ Donuts franchise.

A.What do you know about this company? How can you translate doughnuts (UK), donuts (US) and dunk? What does this company specialize in?

B.Read the talk of Janis Errickson, a franchisee with Dunkin’ Donuts, about the organization she is a part of. Complete the diagram below.

DUNKIN’

DONATS® Baskin 31 Robbins

ALLIED DOMECQ

Parent company 4________________

Well, the company that I am a franchisee with is called Dunkin’ Donuts which has its headquarters in Massachusetts, here in the US. Dunkin’ Donuts is basically a chain of bakery goods and we sell bagels, muffins, donuts, although the majority of our sales, in fact our most profitable item, is coffee even though we are bakery. Dunkin’ started in business way back in 1950 and opened their first franchised store five years later in 1955.

Allied Domecq is actually the central owner of Dunkin’ and they also have other franchised business as part of the group. For instance, they own Baskin Robbins which opened in 1950, becoming a franchise operation right from the start.

They’re specialized in selling ice cream and also beverages, like sodas and shakes.

Togo’s is also part of Allied and they’re the youngest of the franchise brands since they only got going in 1971 and only really developed into a franchising operation in 1977. They what we would call a speciality sandwich chain. Of all three business, Togo’s and Baskin’s have the lowest capital requirements which are about $100,000 compared to Dunkin’s which is double that.

Ex. 7. Work in small groups. Find the information about companyfranchisor/ franchisee. Write the franchise profile. Make a presentation of the business,

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explaining how it operates and what investments are required from franchisees. When you have finished your presentations, compare them to the rest of group and decide which you would be interested in and why.

UNIT VIII. MARKETING

Topics for discussion.

1.What is marketing?

2.Four Ps?

3.How to market a company to make it successful?

4.Brands and branding.

Ex. 1. Read the text and explain the meaning of the words in bold.

Marketing is the process of planning, designing, pricing, promoting and distributing ideas, goods and services, in order to make and attract a profitable demand for a product and satisfy customer needs.

Companies point out how the special characteristics or features of their products and services possess particular benefits that satisfies the needs of the people who buy them.

Non-profit organization have other, social goals such as persuading people not to smoke, or give money to people in poor countries, but these organizations also use the techniques of marketing.

In some places, even organizations such as government departments are starting to talk about, or at least think about their activities in terms of the marketing concept. Marketing process involves the four Ps:

product: identifying consumer needs and wants in order to decide what to sell price: deciding what prices to charge

place: deciding how it will be distributed and where people will buy it

promotion: deciding how the product will be supported with advertising, special activities, etc.

The fifth P which is sometimes added is packaging: all the materials used to protect and present a product before it is sold.

The four Ps are a useful summary of the marketing mix, the activities that you have to combine successfully in order to sell.

To market a product is to make a plan based on this combination and put it into action. A marketer or marketeer is someone who works in this area.

(Marketer can also be used to describe an organization that sells particular goods or services.)

Ex. 2. Read the article and answer the questions.

Most people and many managers do not understand the role of marketing in modern business.

Marketing is two things. First, it is a strategy and set of techniques to sell an organization’s products or services. This involves choosing target customers and

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designing a persuasive marketing mix to get them buy. The mix may include a range of brands, temping prices, convenient sales outlets and a battery of advertising and promotions. This concept of marketing as selling and persuasion is by far the most popular idea among both managers and public.

The second, and by far more important concept of marketing, focuces on improving the reality of what is on offer. It is based on understanding customers’ needs and developing new solutions which are better than those currently available. Doing this is not a marketing department problem, but one which involves the whole organization. For example, for Rover to beat Mercedes for the consumer’s choice involves engineering new models, developing lean manufacturing processes, and restructuring its dealer network.

Creating company-wide focus on the customer requires the continual acquisition of new skills and technology. Marketing is rarely effective as a business function. As the chief executive of Hewlett Packard put it: “Marketing is too important to leave to the marketing department”. Such companies understand that everybody’s task is marketing. This concept of marketing offering real customer value is what business is all about.

From the Business.

1.Which of the four Ps are mentioned here?

2.Does the author think the four Ps are complete definition of marketing?

3.Does the author think that marketing is only for marketers?

4.Can a poor product be made successful by clever marketing techniques?

Ex. 3. Read the article below.

A. Find words and expressions relating to “The four Ps” of the Coke and Pepsi marketing mix. Fill in the table.

GUESS WHO WANTS

TO MAKE A SPLASH IN WATER

Will Coke and Pepsi leave smaller bottlers high and dry?

By Dean Foust in Atlanta

First came Cola Wars. Next the Juice and Iced Tea Wars. Now beverage giants Coke and Pepsi are about to fight another beverage battle: the water Wars. Are the market may never be the same?

The $4.3 billion bottled-water business has been divided among countless small regional players producing brands such as Alaska Ice Age Premium and McKenzie Mist. There are a handful of premium brands such as Evian and Perrier. But the biggest, Poland Spring, has only 7.5% share. And with bottled-water consumption increasing 10% annually – triple the growth rate of the much larger but more mature soda business – it’s a temping market for both Coca-Cola Co. and Pepsi Co Inc. Pepsi